Overview

The oil price dropped briefly below $60 a barrel for the first time since March. Since early August it has declined by 21% because of growing worries about a global slowdown next year.

After years in which the American consumer has buoyed global demand, much concern is focused on the outlook for housing in the United States. There were further signs this week that the market is cooling fast. The median house price fell by 1.7% in the year to August, according to the National Association of Realtors—the first annual decline since April 1995. Activity was also much lower than a year ago. Sales of existing homes fell by 12.6% in the year to August while those of new homes declined by 17.4%.

On a brighter note, the fall in the price of oil appears to be pepping up American consumer confidence, which increased from 100.2 in August to 104.5 in September, according to the Conference Board. However, orders for manufactured durable goods fell for the second month running in August, declining by 0.5%.

Businessmen in Germany are holding their nerve. The Ifo business-climate index barely dipped in September, confounding expectations of a sharper decline. However, French businessmen have become a bit gloomier. The INSEE index, which tracks their mood, fell from 108 in July to 107 in September.

The immediate industrial outlook in the euro area is still looking good. New orders rose by 1.8% in July, more than expected. That left them 9.7% higher than a year before, thanks to higher demand for machinery and transport equipment.

Britain's economy grew more slowly in the second quarter, compared with the first, than had previously been reckoned. Official statisticians revised growth down from 0.8% to 0.7%. However, they left growth in the year to the second quarter unchanged at 2.6%. They made a sharp downward revision to growth in nominal GDP during the same period, lowering it from 6.0% to 4.8%. The current-account deficit narrowed to £7 billion ($12.8 billion) in the second quarter, from £8.7 billion in the first three months of the year.

In Japan, the price index for services traded among companies rose by 0.3% in the year to August, the first annual increase for more than eight years.